ASSIGNMENT SUBMISSION – 1

By- Anjali Patidar

To- Vinayak Khare

State Trading in India

BBA V Sem (FT)

Q.1 Discuss the role of PEC in Imports and Exports?

Answer. PEC Ltd (formerly – The Project and Equipment Corporation of India Ltd.) was carved out of
the STC in 1971-72 to take over the canalized business of STC’s (State Trading Corporation of India
Ltd.) railway equipment division, to diversify into turn-key projects especially outside India and to aid
and assist in promotion of exports of Indian engineering equipment.

With effect from 23rd May, 1990, PEC Ltd. became a subsidiary of the then newly formed Holding
Company, Bharat Business International Ltd. Thereafter, from 27th March, 1991, PEC Ltd. became an
independent company directly owned by the Government of India.

The main functions of PEC Ltd. includes export of projects, engineering equipment and manufactured
goods, defence equipment & stores, import of industrial raw materials, bullion and agro commodities,
consolidation of existing lines of business and simultaneously developing new products and new
markets; diversification in export of non-engineering items e.g., coal and coke, iron ore, edible oils,
steel scraps, etc.; and structuring counter trade/ special trading arrangements for further exports.

Over the years, business of PEC Ltd. has diversified with industrial raw materials, commodities and
bullion constituting major part of its turnover and profit. Some of the key initiatives have been
consolidation of existing line of business and selective diversification into sustainable business areas
improving operational efficiency and cost effectiveness.

Q.2 Explain the weakness of State Trading in Foreign Trade?

Answer. The Indian Institute of Management, Ahmadabad has identified certain weaknesses on the
part of the STC.

1. STC was formed with its own objectives. But the management of the STC has rarely taken decisions
independently.

2. The STC management has not followed clear cut criteria for the choice of the new products.

3. The STC has not developed much expertise to locate and develop sources of supply for exportable
products.

4. Not much expertise is developed to utilize the sources of supply abroad.

5. The STC lacked expertise in operating as an agent, in processing indents and tenders and in
transportation and distribution.
Steps taken by STC to improve performance
State Trading Corporation has taken the following steps to improve its performance:

1. The STC has added new items to its export basket like moccasins, orthopaedic shoes, sports shoe
uppers, compressors, HD pipes, cocoa beans, peacock feathers, and clutch and security bags.

2. The STC has taken efforts to identify new markets for Indian commodities and manufactured goods.
Moreover, it has established itself in the new markets on a long-term basis.

3. The STC has developed a strong production base and manufacture quality goods. With the help of
state undertakings, cooperative organizations and other sectors, the STC has a reliable supply base.

4. The STC has established 100 per cent export-oriented production units.